US state pension fund weathering pandemic
The state pension fund is confident that, despite the recent volatility in financial markets, it will have no problem paying out roughly £1.05 billion ($1.3 billion) for pension benefits
The state pension fund (Massachusetts, US) is confident that, despite the volatility that has rocked financial markets over the last six weeks or so, it will have no problem paying out roughly £1.05 billion ($1.3 billion) for pension benefits this year.
The Pension Reserves Investment Management Board's Investment Committee held a special meeting via Zoom and conference call Wednesday after PRIM received a "large volume of inquiries" about the fund's performance during the first quarter, which closed at the end of March, Executive Director Michael Trotsky said.
Trotsky talked the committee through some of the current market conditions and how his team has adjusted to working remotely and managing a £57.23 billion ($70.7 billion) state pension fund through uncertain times. He stressed that the Pension Reserves Investment Trust Fund is "not facing liquidity stress as a result of the recent volatility."
The PRIT Fund's annual liquidity needs are relatively low compared to the size and liquidity of the fund. We draw approximately a billion-three [£1.05 billion] annually to pay benefits and we are easily able to meet all of those commitments, Trotsky said. So if [Deputy Treasurer and Executive Director of the State Retirement Board] Nick Favorito is on the line listening, and I'm sure you are, we feel confident that we'll continue to have no problem paying pension benefits.
The retirement funds of state employees, teachers and many municipal employees in Massachusetts are invested through PRIM.
The fund shed 9.9 percent during the first quarter, Trotsky said, adding that it was a better performance than the return on a 60/40 mix of stocks and bonds, and the S&P 500.
For the year ending March 31, he said the fund was down 1.1 percent but performed "substantially better than the traditional 60/40 mix of stocks and bonds." The fund's 3-, 5- and 10-year returns all remain above their benchmarks, Trotsky said.